Harrisburg explores options for selling Capital Region Water system

Harrisburg might sell Capital Region Water to a private company in the wake of costly proposed stormwater fees, Mayor Eric Papenfuse said.

The city has put out a request to see if any private companies or firms would be interested in buying the water and sewer system. That doesn’t mean the city is going to sell the service, but it’s a first step toward potential privatization, Papenfuse said.

“This is basically the city doing its due diligence to determine if a potential sale and transfer of the system would be in the interest to our ratepayers and residents,” Papenfuse said.

Papenfuse said the city just wants to see if a private company would be able to lower rates and fees for residents. He said a private company might be able to bring expertise that Capital Region Water’s volunteer board lacks.

He hopes that could mean savings for Capitol Region Water, which is looking at a variety of expensive improvements.

“I am concerned about the continual spiraling upward of costs, both in terms of fees and rates, for the system,” Papenfuse said.

But according to a statement from the Capital Region Water Board of Directors, privatization doesn’t necessarily mean lower costs. In fact, they say privatization can mean rate increases.

“Given that most research shows rates increase approximately 60 percent when similar publicly-owned utilities are privatized, it is difficult, especially at this early stage, to understand how a plan like this benefits ratepayers,” the statement reads. “When ownership and operational control of water and wastewater systems remain local, customers experience better customer relations, better rates and higher quality products and services.”

Papenfuse said proposed stormwater fees were the “catalyst” for city officials to consider selling the system. Those fees would be about $75 per year for the average homeowner and would go into effect by the beginning of next year if finalized, this publication previously reported.

While an average homeowner would only pay about $75 in additional costs, larger buildings and companies could experience significant increases in their costs. Capital Region Water is in the middle of a 90-day public comment period as its board mulls the fee.

The fee comes on the heels of federal and state mandates to reduce rainfall runoff pollution in the Chesapeake Bay. Capital Region Water officials have estimated more than $300 million in improvements will need to be undertaken to reduce stormwater pollution in the next 20 years. Papenfuse doubts the organization, as it currently stands, can do it.

“I’m not sure the CRW has the capacity to pull all that off,” he said.

Capital Region Water provides drinking water, wastewater and stormwater services for Harrisburg and portions of surrounding municipalities including Penbrook, Paxtang and Steelton boroughs and Susquehanna, Swatara and Lower Paxton townships.

The service as already undertaken millions of dollars in improvements. According to the board’s statement, some of those improvements have already taken effect.

“Since 2013, Capital Region Water has been working to advance a plan that is fair and equitable to ratepayers while also meeting state and federal regulatory clean water requirements,” the statement reads. “And we’re making progress. You can see the investments and improvements being made in every corner of our city and throughout our system regionally.”

Papenfuse thinks a private company might have more luck negotiating with the Environmental Protection Agency, and by proxy a better chance of reducing that costly stormwater fee. A private company would still be responsible for reducing the stormwater reduction, Papenfuse said.

“The obligations that the city and CRW have under the consent decree could transfer to this new company,” Papenfuse said. “Revenues from any fee would go, as CRW is also planning to use them, toward green infrastructure improvement.”

Interviews with firms who want to buy the water and sewer system will take place in September. Papenfuse said he invited Capital Region Water officials to be part of those interviews, but added he doesn’t know if they will participate.

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